Our C-corp uses the annualized income installment method since our revenue is extremely seasonal (educational services company). It's worth noting that even with this method, we still had to pay an underpayment penalty last year because we miscalculated our Q3 payment. Make sure you're documenting your calculation methodology thoroughly and keeping detailed records of how you arrived at each quarterly payment amount. We now use Form 8936 (Annualized Income Installment Method) for each quarter even though it's technically only required at year-end filing. This creates a paper trail showing our good faith effort to comply.

Has anyone successfully requested a waiver for the estimated tax penalty? Our corporation had an unexpected loss in Q4 of 2023 that threw off our entire calculation for 2024 estimates because our prior year numbers suddenly dropped significantly.

Great question! Yes, when you dispose of your entire interest in a rental property, all those suspended passive losses become fully deductible in the year of sale. This is covered under IRC Section 469(g) - you can use them to offset ANY type of income, including your W2 salary. With $100K in suspended losses and a $135K salary, you're looking at potentially significant tax savings. However, a few things to watch out for: 1. **Depreciation recapture** - You'll still owe tax at 25% on depreciation you've claimed over the years, even with a sale loss 2. **Documentation** - Make sure you have proper records of these suspended losses from your Form 8582 worksheets each year 3. **Sale loss calculation** - Your actual loss on the property sale will be separate from the suspended passive losses The silver lining is that after years of carrying these losses forward, you finally get to use them all at once. Given the complexity with depreciation recapture and the large amounts involved, I'd strongly recommend getting professional help to make sure you're maximizing the benefit and reporting everything correctly. Sorry to hear about the rental nightmare, but at least the tax situation should work in your favor!

This is such a common situation with rental properties! I went through something similar with my rental condo that turned into a money pit. The good news is that when you dispose of your entire interest in the rental property, all those suspended passive losses get released and can offset your regular income - including your W2 salary. Just be prepared for the paperwork complexity. With $100K in suspended losses, you'll definitely want to have all your documentation in order. I'd recommend gathering all your Schedule E forms from the past six years and any Form 8582 worksheets that tracked these suspended losses. The IRS will want to see the trail of how these losses accumulated. One thing that caught me off guard was that even though I sold at a loss, I still had some tax liability due to depreciation recapture. It didn't eliminate all the benefits from the suspended losses, but it was something I hadn't initially factored into my calculations. Still, being able to finally use those losses after years of carrying them forward felt like getting something back from an otherwise frustrating investment experience!

As someone who's been in real estate development for 15 years, I'd strongly recommend consulting with a CPA who specializes in real estate. The dealer vs investor status isn't always clear-cut, and I've had projects where we were able to make strong arguments for investor treatment even though we were developing properties.

I've been through this exact situation with my development projects. One key factor that hasn't been mentioned yet is the frequency and scale of your development activities. The IRS looks at whether real estate development is your primary business or just occasional transactions. If you're doing multiple developments per year with the intent to sell, you're almost certainly going to be classified as a dealer. For dealer status, you'll need to report expenses as they occur on Schedule C - this includes your holding costs, permits, materials, labor, etc. The profit gets treated as ordinary income subject to self-employment tax, which can be quite significant. However, there's one strategy worth exploring: if you occasionally hold a property for rental purposes before selling (even just 1-2 years), you might be able to argue for dual-purpose treatment on some properties. This requires very careful documentation of your intent from the beginning of each project. I'd definitely echo the advice about getting a real estate-focused CPA. The nuances here can save or cost you thousands in taxes, and the rules have gotten more complex with recent tax law changes.

Wait a minute - I don't think anyone has addressed the potential drawbacks here. If you give your SSN and they file a 1099-NEC for work that was clearly W-2 employee work (set schedule, supervised work, etc.), YOU could end up paying both halves of FICA taxes (15.3% instead of 7.65%). Before providing anything, I'd send a text saying "Can you explain what tax form you're planning to issue and why?" Document everything. If they say 1099, but you were clearly an employee by IRS standards, you might want to consult with a tax professional. The IRS has specific tests to determine worker classification.

I'd be very cautious about this situation. The timing is suspicious - why wait 8+ months after you stopped working to suddenly request your SSN? A legitimate business would have collected this information when you started working, not months after you left. Before providing any personal information, I'd strongly recommend asking your former employer to provide a written explanation (via text or email) of exactly why they need your SSN and what they plan to do with it. Ask them to specify what tax form they're filing and for which tax year. If they claim they need to issue a 1099 for last year's income, that's potentially legitimate - but they should have done this by January 31st. Late filing suggests poor record-keeping at best, or something more concerning at worst. Also consider that even if they have legitimate tax reasons, you're under no legal obligation to make their life easier after they failed to handle this properly when you were employed. You could simply respond that since no official employment paperwork was ever completed during your time there, you're not comfortable providing personal information now. Remember, you're still required to report this income on your taxes regardless of whether they issue you any forms. But protecting your personal information should be your priority here.

This is why I use cash lol. No electronic trail. But if you're stuck with Zelle, there's actually an exception that applies here that nobody has mentioned. If your friend is paying DIRECTLY for medical expenses, there's a complete exemption from gift tax reporting. So if these payments are going straight to medical bills, your friend wouldn't even need to file a gift tax return regardless of amount.

Just to add another perspective - I went through something similar when my mom was helping me with rent payments via Venmo. What really helped me was keeping detailed records of WHY the money was being sent. I saved all our text conversations where she explicitly said it was a gift to help during my job transition, plus I kept receipts showing what I used the money for. The IRS cares a lot about intent and documentation. Since your friend is helping with medical expenses, I'd suggest keeping records of your medical bills, any insurance communications, and especially any messages between you and your friend that show this is genuinely gift money with no strings attached. If these payments ever get questioned, having that paper trail will be invaluable. Also worth noting - if your friend wants to avoid the gift tax reporting entirely, they could consider paying some of your medical providers directly instead of sending money to you. That way it falls under the medical payment exemption that someone mentioned earlier.